Finance Minister Bill English has come under fire for saying low wages in New Zealand help it compete with neighbouring Australia.
Labour leader Phil Goff said Mr English's comments, made at a weekend leadership forum, showed the Government had no plan to achieve its election promise to close the gap with Australia or to improve the economy.
"The best Bill English can do is trumpet that New Zealand wages are 30 per cent below Australia's giving us an 'advantage'. This from a Government which campaigned at the last election on closing the gap with Australia," Mr Goff said.
Cuts in the budget and potential asset sales would not help and came on top of bailouts to private companies, he said.
Council of Trade Unions secretary Peter Conway said it was true that New Zealand wages were low but that was not a selling point.
"We are seeking a credible economic plan that results in a rise in real wages on a sustainable basis. That requires better distribution of income, higher investment in skills, and greater co-operation at a workplace level.
"But the vision suggested by this Government is that we should compete with Australia using our low wages. That will only result in more and more New Zealand workers going to Australia. It is a barren vision."
Other unions also issued press releases condemning the move and saying employment legislation passed by the National Government had not helped the plight of workers.
Speaking on TVNZ's Q&A programme this morning, Mr English defended his comment as a statement of fact.
"Well, it's a way of competing, isn't it? I mean, if we want to grow this economy, we need the capital - more capital per worker - and we're competing for people as well," he said.
"We need to get on with competing with Australia. So if you take an area like tourism, we are competing with Australia. We're trying to get Australians here instead of spending their tourist dollar in Australia."
Lower wages were not a good thing but they were a fact, Mr English said.
"We want to close that gap up, and one way to close that gap up is to compete... if I go to Australia and talk to Australians, I want to put to them a positive case for investment in New Zealand, because while we are saving more, we're not saving more fast enough to get the capital that we need to close the gap with Australia.
"So Australia already has $40 billion of investment in New Zealand. If we could attract more Australian companies, activities here, that would help us create the jobs and lift incomes."